Do you have to pay Tax on paypal earnings?

 

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I am pretty sure you must pay Tax for your earnings, even online. How do ...
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    Default Do you have to pay Tax on paypal earnings?

    I am pretty sure you must pay Tax for your earnings, even online.

    How do you pay it?

    When do you pay it?

    If your account is verified, does the income count towards the bank account hooked up to the paypal account?

    Have you had to pay tax?

    What if you earned 10 grand lets say, and you bought a computer on ebay for a grand, can you just say you only earned 9 grand, or will the tax office, know you earned 10 grand?

    Does Paypal have the right to remove money and just give it to the Tax man?


    No idea about TAX and paypal, any info will help.

    Thanks in advance.




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    Default Re: Do you have to pay Tax on paypal earnings?

    Not too sure about how things work in the USA.


    But in NZ, you would be classed as a sole trader. As a sole trader you are only taxed on your earining, not your expenses. So say you earn $20K, but then $15K of that was used to reinvest and a further $2K was used to buy a computer to run your business. Then you would only be taxed on the $3K that went to your personal account. Please note though that any amount that becomes your personal spending money can be taxed (so if you decide to leave the business and have $100K in you trading account, then that will be taxed as it is moved to your personal account).

    Also with online based income (the money you have in paypal), it is up to you to declare your income to the goverment unless your company/affiliate does this for you (please note that they have some ways of finding out if your not paying any tax... e.g. W-9 form).

    If you wish to only declare a certian amount of your income then I wish you luck (But it can also save you big time).

    One great way around all of this is you can purchase say a phone, car, computer and other such items and declare them as expenses (don't get too greedy though as they might catch on).

    Again this is my knowledge of NZ and what quite a few of my friends do, so it may be completley different in the USA

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    Default Re: Do you have to pay Tax on paypal earnings?

    OP, I have been wondering the same thing for awhile now.

    If you transfer your paypal earnings into your bank account then you definitely should pay tax on that amount. However, I was thinking that if you got the Paypal debit card, you could just go to any ATM and withdraw the maximum $400 allowable each day. Is there any way the government can find out about that cash?

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    Default Re: Do you have to pay Tax on paypal earnings?

    Quote Originally Posted by paper_chase View Post
    OP, I have been wondering the same thing for awhile now.

    If you transfer your paypal earnings into your bank account then you definitely should pay tax on that amount. However, I was thinking that if you got the Paypal debit card, you could just go to any ATM and withdraw the maximum $400 allowable each day. Is there any way the government can find out about that cash?
    Guys , i would recommend you going to a free business advice place or you have plenty of $$$$ go to a proper one. And explain that you are earning money online. What's the right thing to do. Or , maybe someone you know well, is like a business person and knows some stuff like that, ask him/her if you could buy him lunch and chat about few things. Then ask him/her.

    Or pop into your local council, and ask them or, something like that.

    Just because, if you get advice from , here it was wrong( maybe it wasnt applicable to your location) - you could end up in proper mess. So yeah find someone , you trust and ask them.

    riko
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    Default Re: Do you have to pay Tax on paypal earnings?

    uptown is the tax wizard around here, he'll know.

    I'm sure it'd come under income tax that you declare in april (or whenever you do it in the US).

    If you owned a legit business, you could spend that $10k on "business expenses" and not pay any corp tax. but of course, you'd still pay income tax

    Tax loopholes can be great, but they can stab you in the back if you get them wrong ...

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    Default Re: Do you have to pay Tax on paypal earnings?

    Does this answer your question?

    Proposed IRS Reporting Requirements Become Law

    Hi, Iím Ken Swab, senior federal government relations officer at PayPal. You might have heard that Congress recently passed the Housing and Economic Recovery Act of 2008, a major housing bill that the President signed into law on July 30. The bill contains a provision impacting PayPal and our merchant customers, so I wanted to explain the requirements and what they mean for some of you.

    Under the legislation, PayPal will be required to report to the IRS the total payment volume received by PayPal customers in the U.S. who:

    1. receive more than $20,000 in payment volume in a single year; and
    2. receive more than 200 payments in a single year.

    This legislation applies to all payment providers including PayPal and takes effect in 2011, so the first reports will go to the IRS in January 2012. Our goal when the legislation takes effect is to make it easy for PayPal merchants who fall under the provision to report their taxable incomes.

    I want to emphasize that this new law affects a small percentage of PayPal customers. Early versions of the legislation would have required PayPal to report total payment volume of many more customers, including those who received as little as $600 per year. We worked hard to educate Congress about the unique features of PayPal and the unique nature of our customer base. We also educated lawmakers about the many PayPal customers who receive money from others for reasons not related to operating a business.

    It was important that this legislation didnít burden entrepreneurs with new tax compliance demands or inappropriately raise reporting requirements on those who are not merchants

    With help from many of you, we conveyed these views to congressional leaders. And as a result of that dialogue, the legislation doesnít overreach or negatively impact individual Internet users, the growth of small businesses, or the entrepreneurial spirit that makes the Internet so powerful.

    Thank you, to the many PayPal and eBay customers who took the time to write to your U.S. Senators about this legislation. Your voices encouraged Congress to reject the initial overly-burdensome proposal and to limit the impact of the final version of this bill.

    UPDATE (8/18/08): Thanks for all of your great questions! I have been responding to as many of them as I can. However, because the legislation has just recently been passed and we do not know exactly how the IRS will implement the requirements, we do not yet know the answers to some of the questions that have been posed. Rest assured that as more details about the requirements of this law become available, will provide updates as necessary.

    In response to some of the questions below about business expenses (such as shipping, insurance, etc.), it is very important to point out that the figure PayPal will report to the IRS is only the total payment volume received by your business. Because of business expenses and other reasons, this figure may not match the yearly revenue or income figures that you report to the IRS in your tax forms. We encourage all of you to consult with your tax advisor when this law takes effect to ensure that you are complying with federal tax laws.


    And this should also give you food for thought.....


    PayPal names names as IRS chases tax evaders

    By Paul Lashmar
    Sunday, 6 November 2005


    PayPal, the internet money-transfer arm of eBay, is to disclose the identity of customers who use the service to evade paying US taxes.

    The Internal Revenue Service (IRS) is demanding records of customers using Paypal through offshore accounts in all tax havens, including Jersey, Guernsey, Isle of Man, Gibraltar and other UK dependencies.

    According to the IRS, PayPal's services have proved very attractive to tax evaders and the problem is growing. Customers can buy goods from eBay and many other shopping websites, pay for them from untaxed income held offshore and get the goods sent to their home address.

    Tax authorities are also concerned that PayPal can be used to "launder" untaxed money between an individual's offshore and domestic accounts.

    The IRS said: "Because the elements necessary to transfer money require only two email addresses attached to two bank accounts and/or credit or debit cards, PayPal's structure not only allows persons with monies held in a foreign account to purchase goods and services, it also allows a person with assets secreted in a foreign country to repatriate them to their own domestic bank account without going through traditional banking methods such as a bank-initiated wire transfer."

    The IRS is the first domestic tax agency to take action against tax evaders using PayPal.

    Founded in 1998, PayPal has 76 million accounts and is available in many parts of the world. It now has more account holders than American Express, and eBay's 2005 second-quarter figures celebrated a 49 per cent increase in the value of payments made through PayPal, to a record annual total of $6.5bn (£3.7bn).

    The IRS has asked a federal court for permission to serve a "John Doe" summons on PayPal as part of a clampdown on tax evasion using offshore credit and debit cards. The IRS petition says: "The records requested in the summons will identify the holders of bank accounts at, or payment cards issued by banks in, the listed jurisdictions."

    It follows successful IRS applications to file similar summonses on MasterCard, American Express and Visa as part of its investigation of offshore tax evasion. The IRS says "over $40bn in federal tax revenue is lost every year due to the use of credit cards linked to accounts held in foreign tax havens".

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    Default Re: Do you have to pay Tax on paypal earnings?

    Hey all, some of you in the U.S. may be interested in this web site as well.

    I asked a similar question on WF and was directed here:

    hxxp://w3.irs.g0v/businesses/small/article/0,,id=115045,00.html
    Hope that helps!

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    Default Re: Do you have to pay Tax on paypal earnings?

    Quote Originally Posted by Sheen91 View Post
    I am pretty sure you must pay Tax for your earnings, even online.

    How do you pay it?

    When do you pay it?

    If your account is verified, does the income count towards the bank account hooked up to the paypal account?

    Have you had to pay tax?

    What if you earned 10 grand lets say, and you bought a computer on ebay for a grand, can you just say you only earned 9 grand, or will the tax office, know you earned 10 grand?

    Does Paypal have the right to remove money and just give it to the Tax man?


    No idea about TAX and paypal, any info will help.

    Thanks in advance.

    Ok i saw you were from OZ , so here is someone else asking simlar question in OZ. you might find it helpful
    Code:
     http://answers.yahoo.com/question/index?qid=20080314232818AAxkkcH
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    Default Re: Do you have to pay Tax on paypal earnings?

    You have to pay tax on all your earnings. If the IRS audits you and thinks you are committing fraud, they may ask for both your PayPal and bank account records. However, you can claim legitimate business expenses. If you use your computer, Internet connection, web hosting, cell phone etc. exclusively for business you can deduct the cost of these from your income. (Actually, the cost of the computer has to be amortized over several years unless you specifically elect to deduct it in the first year - talk to a tax specialist about that.) In practice, the IRS is unlikely to bother about 10K of income through selling shit on egay. A little bending of the rules will not get you into trouble. Just don't get too greedy, and try and write off those $2,000 a night hookers as a business expense. As a buddy of mine who is a tax lawyer says, "Pigs get fat, hogs get slaughtered."

    If you are making more that $100,000 a year via Internet/PayPal, you could try moving your legal residence to the Bahamas, so the first $85K of your income will not be liable to US tax, and there is no Bahamian income tax.

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    Default Re: Do you have to pay Tax on paypal earnings?

    Yep; your PayPal income is taxed as "ordinary income" and not just the profit but the whole amount, unless you itemise or run everything through a corporation.

    With a corporation you can often get your tax liability down to zero.
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    Default Re: Do you have to pay Tax on paypal earnings?

    it depends on how you got that money. if you were like writing for ac you wouldnt have to pay till over 600$ for example.
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    Default Re: Do you have to pay Tax on paypal earnings?

    Quote Originally Posted by aardanyul View Post
    it depends on how you got that money. if you were like writing for ac you wouldnt have to pay till over 600$ for example.
    Not true.

    The income is still taxable, they just don't have to send you a 1099 until they have paid you over $600.
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    Default Re: Do you have to pay Tax on paypal earnings?

    Remember, if you are audited by the IRS, one of the first things they will ask for is a copy of all your bank statements and you will need to explain a reason for all the deposits. So, if you plan on not properly reporting any income, avoid the paper trail. Unreported income is better left for "cash only" discretionary expenditures such as food, gas, clothing, entertainment, vices, etc..

    Another trick they will employ is to ask you to list what all your monthly living expenditures are. If that number exceeds your reported income less deductions, then you have some explaining to do.

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    Default Re: Do you have to pay Tax on paypal earnings?

    It's important not to confuse the source of the income (PayPal, AC, eBay, etc.) with the requirement to report the income and pay taxes. Generally speaking, your income from self-employment (and much of the online activities represented on BHW) is taxable as income on which taxes must be paid. Uptown is correct ... the $600 amount is the threshold at which a company must report payments. Even if you earn less than $600 from AC, you must still pay taxes on it.

    There is some income that is not taxable, so you are best advised to see a tax professional to find out what qualifies if you are unsure.

    Don't spend your time trying to avoid paying taxes. Instead, figure out how to maximize your legal deductions, keep extremely accurate business records, and seek out professional advice when you are unsure. Doing anything less will get you into hot water with the IRS.

    By the way, Uptown, you are correct about the income from business activities being taxable. However, you can deduct legitimate business expenses. While I appreciate your desire to promote your own business interests (i.e., by encouraging people to form a corporation), it should be noted that you CAN and SHOULD deduct these expenses even if you are a sole proprietor. The schedule C is appropriate for many of the people with small amounts of income. The benefits of a corporation are well documented, but that is not always the best solution for everyone. It often results in more unnecessary paperwork. My point to readers here is that you can still deduct your qualified expenses and pay tax on the net income (or profits, to use your words.)

    (By the way, I am a California Registered Tax Preparer. The advice above is a general comment about tax liability and not meant to apply to a specific individual or a specific tax situation. I cannot provide accurate advice without knowing all of the facts of a particular situation, which is why I always recommend that you seek the advice of a professional who knows the law and can evaluate your particular situation.)
    Last edited by davidson; 01-16-2009 at 04:48 PM.

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    Default Re: Do you have to pay Tax on paypal earnings?

    Quote Originally Posted by Uptownbulker View Post
    Yep; your PayPal income is taxed as "ordinary income" and not just the profit but the whole amount, unless you itemise or run everything through a corporation.

    With a corporation you can often get your tax liability down to zero.
    So if I understand you correctly, if you have a personal Paypal account you are going to be taxed on your gross receipts collected in paypal unless you list out every single things for the IRS tit for tat? Welp, this is going to be quite a hassle.

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    Default Re: Do you have to pay Tax on paypal earnings?

    Quote Originally Posted by nam6641 View Post
    So if I understand you correctly, if you have a personal Paypal account you are going to be taxed on your gross receipts collected in paypal unless you list out every single things for the IRS tit for tat? Welp, this is going to be quite a hassle.
    Yes and no. Your income from business activities are taxable. Whether you choose to report them to the IRS is a decision you will have to make. (I encourage you to report ALL your taxable income.)

    Alongside your income, you can list (by broad categories) your qualified deductions. For example, you can list marketing expenses of $200. You don't need to show $45 to Google, $15 for business cards, $95 for web hosting, etc. unless the IRS asks you to explain your expenses (in an audit). The goal is to reduce your income as much as possible using these legitimate expenses. The more you reduce your income the less tax you will pay.

    By the way, using a program like QuickBooks (if set up correctly) will help you with your taxes. When you enter an expense, you can code it to the appropriate line on your income tax form. When it comes to tax time, it will print out your expenses by category. Much easier than trying to figure out PayPal's history export.

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    Default Re: Do you have to pay Tax on paypal earnings?

    Not reporting income is called "tax evasion" which will lead you to the slammer if you are caught. When they are going after mafioso and drug dealers, the tax evasion charges almost always prove to be easier to land a conviction than the charges stemming from their criminal activities.

    If, on the other hand, you decide to take a liberal interpretation of what your ordinary and necessary business expenses are, this is called "tax avoidance", which usually only results in penalties and interest owed the tax authorities (no criminal charges) if such deductions are disallowed.

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    Default Re: Do you have to pay Tax on paypal earnings?

    if you can use part of your income for "corporate expenses", then you should be able to pay less taxes

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    Default Re: Do you have to pay Tax on paypal earnings?

    There is some good info in this post!

    Question... if you buy an EPN account (as an example) which already has a SSN# filled in (presumably fake, generated off that generator site)... any ideas what happens here? You're going to get the EPN Commissions either via bank account or Paypal, but it won't be reported under your SSN#.

    So, if I report the income is that sufficient, or would I get in trouble since a different SSN# is listed under the account?

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    Default Re: Do you have to pay Tax on paypal earnings?

    The fact that it looks like you are an Aussie ... don't listen to us idiots in the US don't think the IRS can reach to the island ... but they sure can freeze a bank account or other accounts in the states if they want .. see a tax pro in the land down under ....

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    Smile Re: Do you have to pay Tax on paypal earnings?

    Always assume uncle Sam is watching. But the truth is the govt. catches you based on what you report. If you recieved income that can be traced back to you then for your sake report everything but use generous deduction methods to mitigate your taxes owed. Whatever expense you incurred to create that income is deductible. The best way is to deduct all the expenses and then report the balance as income. My criteria is simple: any income recieved that can be traced back to me I report after taking out my expenses. And if the income is cloaked in secrecy then it is a gift from the lord!!

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    Default Re: Do you have to pay Tax on paypal earnings?

    Ditto, the IRS system is based on what gets reported on their paperwork (a paper trail that is worded to define all its submitters as taxpayers with tax liability), which is used to create an equitable case for tax liability. Kind of like a self-fulfilling prophecy---what you receive is arguably (by legal definition) not 'income' or evidence you are necessarily part of the class subject to tax, but if it's on an information report (furnished by you or a third party) the IRS presumes you are. So the less paperwork and (arguably false) information reports, the better. The housing bill was passed to compel more tax reporting, such to ensnare more people into being mandatory unpaid informants for the government, to expand the IRS's database of presumptive evidence.
    Last edited by zebrahat; 01-16-2009 at 11:49 PM.

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    Default Re: Do you have to pay Tax on paypal earnings?

    So if for example I was living in country A and I had a PP and bank account in country B and I got paid into country B PP and withdrew to country B bank.

    And then used the attached bank card to withdraw from country B in Country A where I'm living is that included as income which is taxable in your residing country?

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    Default Re: Do you have to pay Tax on paypal earnings?

    Yah, most people are talkin about the US, I live in Australia.

    My account is hooked up to my parents PayPal account, I am 17, I only earn about $500/week, online, last week $760 , anyway, when they declare their income, do they just add my income and say they earned it?

    I only have a few thousand in the bank account, and was thinking in buying over my friends site, 22, he has a great site, helped him put it up, etc, I know earnings are legit, he's legit, etc, so I want to buy it, but I don't want to get 10 grand and then buy it, then my parents have to pay 2 grands in tax. >.<

    Taxes in Australia are higher than in the US if you have high earnings. Our taxes are 45% when you get over 180k, in the US it is still high but only 33%.

    but if you have low earning 30k, $580/week, tax over here is 12.4% over in the US its 15%. I think its more fair, people that earn more should have to pay more tax. (no offense to rich people, but your already rich )

    Also if there is any Aussie, just a small question, does the taxation office, start asking for tax after you break the 6k barrier, or if you break the $115/week barrier, ie, 115 x 52 = $6000.

    Thanks for all the help guys.
    Last edited by Sheen91; 01-17-2009 at 07:45 AM.

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    Default Re: Do you have to pay Tax on paypal earnings?

    Quote Originally Posted by Sheen91 View Post
    Yah, most people are talkin about the US, I live in Australia.

    My account is hooked up to my parents PayPal account, I am 17, I only earn about $500/week, online, last week $760 , anyway, when they declare their income, do they just add my income and say they earned it?

    I only have a few thousand in the bank account, and was thinking in buying over my friends site, 22, he has a great site, helped him put it up, etc, I know earnings are legit, he's legit, etc, so I want to buy it, but I don't want to get 10 grand and then buy it, then my parents have to pay 2 grands in tax. >.<

    Taxes in Australia are higher than in the US if you have high earnings. Our taxes are 45% when you get over 180k, in the US it is still high but only 33%.

    but if you have low earning 30k, $580/week, tax over here is 12.4% over in the US its 15%. I think its more fair, people that earn more should have to pay more tax. (no offense to rich people, but your already rich )

    Also if there is any Aussie, just a small question, does the taxation office, start asking for tax after you break the 6k barrier, or if you break the $115/week barrier, ie, 115 x 52 = $6000.

    Thanks for all the help guys.
    Yeh as far as I know mate the first $5400 (maybe it has changed) is the tax free threshold, meaning you don't have to pay any tax on this but I would assume you would have to still declare your earnings and the ATO will advise that you don't have to pay tax and if you have they will reimburse you around August sometime.

    I'm thinking the best option is Panama

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    Default Re: Do you have to pay Tax on paypal earnings?

    dr stew, its 6k now

    Thanks.

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    Default Re: Do you have to pay Tax on paypal earnings?

    Ok yeh I have been out of the country for 3years, just got back.

    Probably the best thing to do (You might have to wait till your 18) is get yourself an LLC and have you as a director.

    You then claim everything you can and pay yourself directors fees I believe these are much less than income tax.

    Also I believe dividends have less tax too.

    You could also then pay yourself a wage of $580 a week if you wanted. Im no expert on all this though.

  36. #28
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    Default Re: Do you have to pay Tax on paypal earnings?

    Thanks For All The Responses guys!
    I was up thinking about this the other day.

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    savag3st is offline Registered Member
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    Default Re: Do you have to pay Tax on paypal earnings?

    Damn, surpassed the threshold

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    Default Re: Do you have to pay Tax on paypal earnings?

    There's a simple rule when it comes to tax, if you're earning money, you have to pay tax.

    If you're gonna declare you're earnings, the easiest thing to do is get an ABN and have a sneak around business.gov.au and the ATO website, there is heaps of info on the net about small business in Australia. Find out what you can claim and start keeping receipts and invoices. If you're working from home, you can claim part of your electricity bill, phone bills, your mobile phone bill, stationary, computer hardware etc etc. The main idea is to spend your money on business expenses and minimise the amount if income tax you have to pay. You would be surprised at what you can claim if you work it out.

    You can try to dodge tax if you want but why bother. Tax is a game, play to win, you can benefit a lot by playing by the rules. Of course, unless you like accounting, the goal is to make enough money to be able to hire really good people to worry about your tax for you and bring you even more benefits

    Starting an LLC is preferable but more complicated and costly.

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    Default Re: Do you have to pay Tax on paypal earnings?

    Think of it this way; if you didn't have to pay tax, wouldn't all major corp's just pay you that way, and pocket the 20-40% that goes to the government to themselves?

    No Escaping The Tax Man!
    Watch This Space.

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    Default Re: Do you have to pay Tax on paypal earnings?

    There is a way to dodge tax. Its called PANAMA

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    Default Re: Do you have to pay Tax on paypal earnings?

    Quote Originally Posted by zebrahat View Post
    Ditto, the IRS system is based on what gets reported on their paperwork
    Generally true, but their systems also look out for statistical anomalies based on comparing income tax returns. For example, if you are a contractor living in a particular county and state, they might compare your tax returns to similar contractors and look for anomalies. If all of the other contractors are making huge profits and you report a huge loss, it might raise a red flag and perhaps trigger an audit. This is especially true in cash businesses like restaurants and retail stores.

    So, the point is ... you might find your tax returns scrutinized even if there's no third-party reporting.

  42. #34
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    Default Re: Do you have to pay Tax on paypal earnings?

    Quote Originally Posted by Sheen91 View Post
    I am pretty sure you must pay Tax for your earnings, even online.

    How do you pay it?

    When do you pay it?

    If your account is verified, does the income count towards the bank account hooked up to the paypal account?

    Have you had to pay tax?

    What if you earned 10 grand lets say, and you bought a computer on ebay for a grand, can you just say you only earned 9 grand, or will the tax office, know you earned 10 grand?

    Does Paypal have the right to remove money and just give it to the Tax man?


    No idea about TAX and paypal, any info will help.

    Thanks in advance.
    I think it depends on where you live. as for me, im never too concerned. which means, if I had to pay tax, i would have known. I don't know man.

  43. #35
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    Thumbs down Re: Do you have to pay Tax on paypal earnings?

    Quote Originally Posted by Uptownbulker View Post
    Yep; your PayPal income is taxed as "ordinary income" and not just the profit but the whole amount, unless you itemise or run everything through a corporation.

    With a corporation you can often get your tax liability down to zero.
    I know you are working hard on selling your corporations, but running everything through a corporation that you own does not provide any tax advantages. The IRS considers the income as pass through income meaning that your income/deductions pass through your corporation directly to your personal tax return. If you can deduct it as a corporation, you can also deduct it as a sole proprietor.

    Corporations and LLC's do have a purpose, but they won't help you with your tax situation.

  44. #36
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    Default Re: Do you have to pay Tax on paypal earnings?

    Any clues to how it might work in Canada?

  45. #37
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    Default Re: Do you have to pay Tax on paypal earnings?

    Quote Originally Posted by Sheen91 View Post
    I am pretty sure you must pay Tax for your earnings, even online.

    How do you pay it?

    When do you pay it?

    If your account is verified, does the income count towards the bank account hooked up to the paypal account?

    Have you had to pay tax?

    What if you earned 10 grand lets say, and you bought a computer on ebay for a grand, can you just say you only earned 9 grand, or will the tax office, know you earned 10 grand?

    Does Paypal have the right to remove money and just give it to the Tax man?


    No idea about TAX and paypal, any info will help.

    Thanks in advance.
    The bank sends reports to ATO, about what went in and out of your account. So you have to declare the money.

  46. #38
    Dirtydeeds is offline Newbies
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    Default Re: Do you have to pay Tax on paypal earnings?

    So... any specific answers to the OP's questions posed?

    Interested

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    cybergold is offline Newbies
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    Default Re: Do you have to pay Tax on paypal earnings?

    YES YES YES YES YES YES YES
    You have to pay taxes on paypal income.
    1) In the US they have the concept of "world-wide income" which means if you are a resident or citizen or do business in the US you will be taxed.

    2) I assume when you refer to paypal income that it is income from sales of services and goods that are being paid via paypal. Typically you pay taxes as a self employed.

    People fail to recognize the difference between what you are supposed to do (pay taxes) and what the IRS finds out. However, the internet has been around for some time and the IRS as sleepy as it might be has acted. I am no longer sure what ebay, paypal, amazon etc. report to the IRS. The advantage of being legit is that your business has less risk and will not be suddenly shut down.

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    Default Re: Do you have to pay Tax on paypal earnings?

    Do you live in the USA?
    Do you earn less than $100,00 a year?

    If you answered both yes, then your answer is you owe the government $11,000.
    Last edited by TehEpidemick; 01-19-2012 at 10:53 AM.
    This member has been permanently banned from BHW.

  49. #41
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    Default Re: Do you have to pay Tax on paypal earnings?

    Quote Originally Posted by Sheen91 View Post
    I am pretty sure you must pay Tax for your earnings, even online.

    How do you pay it?

    When do you pay it?

    If your account is verified, does the income count towards the bank account hooked up to the paypal account?

    Have you had to pay tax?

    What if you earned 10 grand lets say, and you bought a computer on ebay for a grand, can you just say you only earned 9 grand, or will the tax office, know you earned 10 grand?

    Does Paypal have the right to remove money and just give it to the Tax man?


    No idea about TAX and paypal, any info will help.

    Thanks in advance.

    Paypal reports your earnings to the IRS and you state tax board, so yes
    you have to pay your taxes.

    You should be talking to a tax person not people in here, for more definitive
    information as to your responsibilities, and what deductions you can claim.

    Get a good tax attorney or a cpa, which is what I have.

    Good Luck


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